Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The Diversified Portfolio Corporation provides investment advice to clients. The summarized income statement for the year ended December 31, 2018 is shown below: Service revenues

The Diversified Portfolio Corporation provides investment advice to clients. The summarized income statement for the year ended December 31, 2018 is shown below:

Service revenuesps1,220,000
operating expenses860.000
Profit before income taxes360.000
Income from tax expenses72,000
Net Incomeps288,000


The following balance sheet information is also available:

31/12/1831/12/17
Moneyps491,000ps86,000
accounts receivable152,000116,000
Accounts payable (operating expenses)102,00076,000
Income taxes payable26,00047,000


In addition, during the year the following transactions were carried out:

Common shares were issued for $132,000 in cash.

Long-term investments sold for $66,000 cash. The original cost of the investments was also $66,000.

$96,000 in cash dividends were paid to shareholders.

The company does not have any outstanding debt, other than the accounts payable listed above.

Operating expenses include $46,000 in depreciation expense.


Required:
1. Prepare a statement of cash flows for 2018 for the Diversified Portfolio Corporation. Use the direct method to report operating activities.
2. Prepare the cash flows from operating activities section of Diversified's 2018 statement of cash flows using the indirect method.

Step by Step Solution

3.42 Rating (165 Votes )

There are 3 Steps involved in it

Step: 1

1 Statement of Cash ... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting

Authors: J. David Spiceland, James Sepe, Mark Nelson, Wayne Thomas

9th Edition

125972266X, 9781259722660

More Books

Students also viewed these Accounting questions

Question

What is the right answer?

Answered: 1 week ago